Neiman Marcus 2003 Annual Report Download - page 333

made by employees on the Company's behalf. The costs and consequences of an antitrust investigation or litigation can be serious for
individual employees, as well as for the Company itself, even if the employees and the Company are ultimately vindicated. Individual
violators of antitrust laws can be imprisoned for up to three (3) years and fined in excess of $350,000 per violation. Corporations that
violate antitrust laws can be subject to criminal penalties in excess of $10 million per violation. In addition, companies can be subject
to treble damage awards in civil lawsuits.
INSIDER TRADING
Employees shall not trade securities of the Company or other firms based on material non-public information.
Employees also shall not provide such non-public information to individuals outside the Company.
It is a cornerstone of federal securities laws that a purchaser and seller of securities should be on as equal footing as is
possible with respect to information regarding the issuer of the securities being traded. Consequently, federal securities laws forbid the
purchase or sale of a security based upon "inside" information unavailable to the other party. Federal securities laws also prohibit
employers, directors, officers and employees from knowingly or recklessly failing to take steps to prevent the trading on, or tipping of,
inside information by those whom they directly or indirectly control.
The consequences of insider trading can be severe. Employees who trade on inside information, or tip information to others,
are subject to civil penalties of up to three (3) times the profit gained or loss avoided, criminal fines of up to $1 million, and
incarceration of up to ten (10) years. If the Company or supervisory personnel fail to take appropriate steps to prevent insider trading
by employees, they are subject to civil penalties up to the greater of $1 million or three (3) times the profit gained or loss avoided as a
result of the employee's violation, as well as criminal penalties of up to $100 million.
Employees who know material information which has not been publicly disclosed, and which concerns the financial
condition, earnings or business of the Company, or any important development in which the Company is or may be involved, shall not
buy or sell shares of stock or other securities of the Company (or puts, calls, options or other rights to buy or sell such securities) until
a reasonable time after public disclosure of such inside information. Employees also shall not disclose such inside information to
individuals not employed by the Company until a reasonable time after the Company publicly discloses the information. In addition,
employees are never to advise others to buy or sell securities of the Company. These same rules also apply to the use of material
nonpublic information about other companies.
What is "material"? Any fact which may affect the price of the securities and/or which a reasonable investor would
consider important in deciding whether to purchase or sell shares of stock or other securities of the Company is generally considered
material. Examples of what may be considered to be material information include: financial results or forecasts; a significant proposed
acquisition or disposition of a business; hiring, firing or resignation of a Director or Officer of the Company; a stock split or change in
dividend; significant litigation; or changes in customary earnings and earnings trends.
What constitutes public disclosure? Information effectively is disclosed to the public if it is contained in an annual or
quarterly report to stockholders, a press release issued by the Company, or in public filings with securities regulatory authorities.
What is a reasonable period of time after which purchases and sales can be made? Essentially, the investing public
must have had time to digest and analyze the information which has been disclosed. For information disclosed through a press release,
a good rule of thumb is that purchases and sales can be made beginning two (2) business days after the release. For information
disclosed in a report mailed to stockholders, purchases and sales should not be made until one (1) week after the date of mailing.